Top US hedge fund first sweet — now sour on China economy, market

We know the conventional wisdom is that China has peaked and this is just the beginning of a disaster on the Chinese markets. But the one thing we know is sheep go to slaughter. So as long as we’re not sheep, we’ve got a 50% chance.

“Our views about China have changed,” Raymond Dali, the billionaire founder of Bridgewater Associates LP, the world’s biggest hedge fund, wrote to colleagues and clients in a note sent earlier this week, reported The Wall Street Journal. “There are now no safe places to invest.”

This comes on the heels of Bill Ackman, head honcho at the giant Pershing Square hedge fund, saying last week that the Chinese financial system looks worse than the US in 2007. On Monday, we tore that argument apart.

But Bridgewater hurts. The fund’s executives have been some of Wall Street’s more outspoken bulls on China. It appears that June’s stock market rout has them running scared.

“Bridgewater has $169 billion under management and is renowned for its ability to navigate global economic trends—including the profit it turned in 2008, when most of its peers lost big,” said WSJ. The company’s flagship fund reported its worst month in nearly a year in June, trimming its gains for 2015 to about 10%, a person familiar with the matter told WSJ.

What can Asia Unhedged say when the world’s biggest hedge fund turns its back on the world’s fastest growing economy?

No safe places to invest? We don’t need hedge funds to find safe places to invest. We’ve got a safe place to invest. It’s a savings account at your local bank

We need hedge funds to find the “best” places to invest. No reward without risk. Yeah, that takes research and skill. And not just a few cajoles. It’s always a question of more or less “ballast” to protect one’s investments.

Asia Unhedged remains bullish on China. China’s real economy is on a recovery path — and this should help Chinese stocks. In the meantime, Chinese regulators must follow through with more decisive monetary easing — something we expect in the near term.